What happens when you take out more than one funeral policy? Are you allowed to and what will your insurers do when you claim?
In South Africa, funeral cover is not governed exactly the same as life insurance. Most importantly, you are limited to R100,000 per policy. So many South Africans take out more than one policy with different insurers to increase their total cover.
However, there are some things you should be aware of that may affect your claims, cover and premiums.
Am I allowed to have more than one funeral policy?
According to the Insurance Act, a funeral plan may not provide more than R100,000 per insured life per policy. More simply stated, each policy cannot provide more than that limit of cover but there is nothing that specifically states that you cannot have more than one policy nor that you can't be insured on more than one policy. The Act seems to allow for this.
It is then up to each insurer to decide how to manage or limit their risk accordingly. The insurer will make decisions and apply rules on their products to manage their risk the way they want to.
What will your insurer do?
If you already have a funeral policy, some insurers will:
- not allow you to take out a second policy if you already have one
- allow you to do it but limit the claims payout in some way
- allow you to do it without any restrictions
It is therefore very important to check the terms and conditions of your policy to make sure that your insurer won't limit you in any way if you try to do this.
What will Episodic and African Unity Life do?
The Episodic Funeral Plan is underwritten by African Unity Life and we fall into the 3rd option above. Unlike many other insurers, with us you may have other funeral policies and African Unity Life will pay a valid claim regardless if you have other funeral policies. In effect, you can theoretically have more than R100,000 funeral cover across multiple policies and your claims will not be affected by this.
Be aware of the costs
Every funeral policy with every insurer will have an administration fee and possibly other fees (like brokerage fees). For each additional funeral policy you take out, these fees add up so it is important to keep an eye on them. It may make more sense to keep as few funeral policies as possible to minimise those fees.
With the Episodic Funeral Plan, there is an upper cover limit of R50,000 per insured family member. So if, for example, you have 2 other policies where you are covered for R20,000 each, it may make sense to consolidate them into one policy with us and reduce your total premiums. You can always talk to us about this and we'll be happy to assist.
Why would you want more than one funeral policy?
The amount of cover available per insured person on a policy may differ, according to how you have structured it. For example, with the Episodic Funeral Plan, you could have R50,000 for you and your spouse but only R10,000 for your mother. To increase the total cover for your mother, she may need to have a second policy (or be covered on another policy) to increase her total amount of cover available on her death.
You need to do your own planning here. Decide how much cover you need on the death of a family member based on
- the cost of the type of funeral you want
- the amount of free cashflow you need while the estate of the deceased is processed
Then you can decide how many policies you need, for how much and with what product.
Disclaimer: do note that this article is valid as of time of writing in 2022. Product updates may increase the total cover per policy or affect the applied rules. We will endeavour to update these articles in the event of material product changes.